Name of bank entered in register of members as holder of shares - Whether such holding of shares will have to be taken into account for the purpose - Companies Law - No. 18/74,

Circular : No. 18/74, dated 12 ‑ 12 ‑ 1974. Subject:- Name of bank entered in register of members as holder of shares - Whether such holding of shares will have to be taken into account for the purpose According to section 224A, a special resolution is required for appointment and reappointment of an auditor in the annual general meeting of those companies in which not less than 25 per cent of the subscribed share capital is held whether singly or in combination by public financial institutions, nationalised banks, etc., mentioned in that section. A question has been raised whether it is only those shares in a company which are beneficially held by a nationalised bank that will be taken into account in calculating the 25 per cent of the subscribed share capital of that company or even those shares of the company which having come into the custody of the nationalised bank as security for loans advanced to the constituents are got transferred by the nationalized bank in its name for making the security effective, will also be taken into account. It is clarified that irrespective of the circumstances in which a nationalized bank is holding shares, if the name of the bank is entered in the register of members of the company as holder of shares, such holding of shares will have to be taken into account for the purposes of section 224A.